NBA Season Tips Off Debate On The Future Of Broadcast Television

NBA Season Tips Off Debate On The Future Of Broadcast Television

Lots of people will be watching tonight when the San Antonio Spurs raise their 2013 championship banner before taking on the Dallas Mavericks to kick off the 2014 NBA season. Last year, the NBA averaged about 2 million viewers per game. That is a lot of eyeballs, but is the number big enough to justify the landmark long-term media rights deal the league just inked with ESPNESPN and Turner Broadcasting for $24 billion over nine years?

To put the NBA’s audience in context, consider that the average primetime audience for major network sitcoms and dramas is just over 10 million viewers for the top-ranked networks so far this season.

So, while the NBA’s TV audience is certainly significant and hits that desirable 18-49 year-old demographic, it isn’t the only game in town when it comes to viewership. Given the numbers, it’s easy to see the argument being made by critics of the deal, who say it is adding unnecessary cost pressure to pay-TV distributors and threatening to wreak havoc on the NBA salary cap. But it’s also important to consider the premium space that sporting events occupy in a fragmented media landscape where everyone is recording their shows and fast-forwarding through the commercials.

Live sports have become the last bastion of content that people would rather consume live than recorded – that’s really valuable real estate for broadcasters these days. NBA Commissioner Adam Silver defended the league’s rich TV deal by saying: “These new agreements demonstrate the value of live sports in a DVR world.”

Think you can get away with recording the big game and not finding out who won in today’s hyper-connected 24-hour news cycle? As this clip from CBSCBS’s How I Met Your Mother proves, it just isn’t possible.

The NBA is hardly alone in profiting from this trend. The NFL also struck a significant deal last month that will require DirecTV to pay $1.5 billion a year, through 2022, to retain its rights to carry NFL Sunday Ticket, a satellite package of out-of-market games. NextNext year, the NFL expects to take in between $6.5 billion and $7 billion a year in rights fees from its TV partners.

These types of TV deals are significant, not only because of their size, but because they reveal the desperation of broadcasters and pay-TV providers. After years of being beaten down by advertisers over audience fragmentation, time-shifted viewing and competition from streaming video, broadcasters will do almost anything to cling to reliable, big, live audiences.

Even Nielsen, the venerable tracker of viewership numbers, has begun tracking primetime viewership numbers for non-sports programming by including “live viewers, plus recorded programming viewed within seven days of original air date.” That’s all fine and good for gauging the popularity of a new sit-com, but how do you explain to the largest TV advertisers, companies like AT&TAT&T, Verizon, Chevy and McDonald’s, which all spend around a billion dollars a year on TV ads each year, that some portion of these could be fast-forwarded?

That conversation is a little easier when there is an inherent value in watching the event live, which is only really the case with sports. But even that can’t last forever.

As HBO showed us with its announcement this month that its popular HBO Go streaming platform will be available as a standalone service in 2015, it’s relatively straightforward for content owners to bypass pay-TV providers. World Wrestling Entertainment did something similar earlier in the year when it launched its own digital network offering round-the-clock streaming of its programming for $10 per month, no cable contract required.